One of the pressing legal issues that could affect the public offering is the sexual discrimination
claim by Tammy. “Title VII of the Civil Rights Act prohibits an employer from treating you
differently, or less favorably, because of your sex, which is defined to include pregnancy, sexual
orientation, and gender identity. This law also prohibits employment decisions based on
stereotypes (unfair or untrue beliefs) about abilities and traits associated with gender” (Sex
Discrimination | U.S. Equal Employment Opportunity Commission, n.d.). Having this type of
litigation hanging over the company and Fred will not be good for the IPO and should be taken
care of prior to going public. The problem is that whether it is true or not people will look at the
company a little differently and may not want to invest in a company with that claim hanging
over them. But if they deal with it swiftly and show why these claims are unfounded, they will be
able to clear their name with most.
When taking a company public, that company must file a registration statement. “A registration
statement is a document containing a description of the securities offered for sale, an
explanation of how proceeds from the sale will be used, a description of the registrant’s business
and properties, information about the management of the company, a description of any pending
lawsuits, and certified financial statements” (Kubasek, 2019). This is a very detailed report that
will be available to all potential investors, and they should say something about the issues they
had previously with Jane, Tammy, and Bob, they should include an explanation of solutions
including this is why we hired an experienced accountant this time and we have a patent to
protect our recipe. Being transparent, upfront and honest will be key to avoiding future lawsuits
for withholding information from potential investors. According to regulations, it is unlawful “to
make any untrue statement of a material fact or to omit to state a material fact” (Kubasek, 2019).
I would consider both the current litigation from Tammy claiming sexual discrimination, the
previous embezzlement with Jane, and the reverse engineering and posting of the recipe online
are all material facts as they affect the business and potential investors need to know about them
in order to make the decision on whether or not to invest. But they should also include the
solutions and how they overcame them.
References
SexDiscrimination|U.S.EqualEmploymentOpportunityCommission.
(n.d.). Www.eeoc.gov
. https://www.eeoc.gov/youth/sex-discrimination
Kubasek, N. K., M Neil Browne, Dhooge, L. J., Herron, D. J., & Barkacs, L. L.
(2019).Dynamic business law. Mcgraw-Hill Education.
